Report by Lisa Bridges and Patrick Duffy
The Greater Houston MSA industrial market is in excellent shape. Southeast Texas ports continue to break records for incoming (and exporting) goods as distribution shifts more to the Gulf and Southeast U.S. ports from the highly constrained West Coast ports. This trend is expected to continue after the severe backlogs and potential upcoming labor issues on the West Coast.
The market continued to gain momentum in Q3 2022 as leasing velocity reached over 11 million square feet in the third quarter. The increase in demand for space continued to spur new development with over 27 million square feet under construction and an additional 64 million square feet proposed or in the final planning stage. Houston’s industrial market recorded 5.6 million square feet of positive net absorption in the third quarter, pushing the year-to-date total to more than 21 million square feet. The vacancy rate increased 40 basis points quarterly, but was down annually by 150 basis points.